On the shores of Seneca Lake in upstate New York, a private equity company has bought a decommissioned coal power plant and converted it to burn natural gas. It then switched it back on to become what it describes as a “power plant-cryptocurrency mining hybrid”.

Greenidge Generation Holdings, the company behind the plant, plans to go public later this year, saying it expects to become “the only US publicly listed bitcoin mining operation with its own power source”.

In a presentation to investors, it says its direct line in to the Empire Pipeline system for gas allows it to produce coins for just $3,000 a pop — a hefty margin considering that even after a heavy recent drop on a possible crackdown from Chinese regulators, they sell for about $40,000.

The company says it is proud of shifting away from coal. It is looking to buy more power plants and vastly scale up operations. Climate activists, however, are aghast that fossil fuels will be burnt to mine crypto, and are pushing regulators to clamp down on this and other similar projects to prevent a surge in greenhouse gas emissions.

But no activist has so far had such a profound impact on awareness of bitcoin’s carbon question as Elon Musk, the Tesla chief executive so fond of bitcoin that he loaded up his corporate coffers with $1.5bn of the cryptocurrency.

Musk said last week he had changed his mind, and reversed plans outlined in February to accept bitcoin for payments for his vehicles. “Cryptocurrency is a good idea on many levels and we believe it has a promising future, but this cannot come at great cost to the environment,” he said.

The statement generated a backlash from bitcoin believers, some of whom have made huge returns from early bets on the asset class and see it as the future of money. Crypto proponents have accused him of ignorance over mining methods or of seeking to protect the shadowy interests of big government. A new crypto coin named “FuckElon” has appeared.

To academics who for years have been measuring bitcoin’s energy intensity, however, Musk has simply pointed out an established truth, albeit in his eccentric manner. It is a question so far largely ignored by governments, by heavy-hitting environmental charities, and by the banks and exchanges that facilitate the vast cryptocurrency industry.

“Bitcoin alone consumes as much electricity as a medium-sized European country,” says Professor Brian Lucey at Trinity College Dublin. “This is a stunning amount of electricity. It’s a dirty business. It’s a dirty currency.”

Economic authorities are starting to take notice. The European Central Bank on Wednesday described cryptoassets’ “exorbitant carbon footprint” as “grounds for concern”. In a paper earlier this month, Italy’s central bank said the eurozone’s payments system, Tips, had a carbon footprint 40,000 times smaller than that of bitcoin in 2019.

Measuring precisely how dirty bitcoin is has become a cottage industry in itself. The latest calculation from Cambridge university’s Bitcoin Electricity Consumption index suggests that bitcoin mining consumes 133.68 terawatt hours a year of electricity — a best-guess tally that has risen consistently for the past five years. That places it just above Sweden, at 131.8TWh of electricity usage in 2020, and just below Malaysia, at 147.21TWh.

The true figure for bitcoin could in fact be much higher; Cambridge’s extreme worst-case scenario calculation, based on miners using the least energy-efficient computers on the market as long as the process is still profitable, has peeled away from its central estimate sharply since November last year as the price of bitcoin has rocketed. The rationale: a rising bitcoin price attracts new miners, and also means that mining with older, less efficient equipment, makes financial sense.

The higher price also means the machines producing bitcoin are forced to complete ever-tougher puzzles in search of their quarry. At the upper limit, bitcoin’s electricity consumption would be about 500TWh a year. The UK consumes 300TWh. About 65 per cent of the crypto mining comes from China, where coal makes up around 60 per cent of the energy mix.

Naturally, there is space for disagreement on these statistics, and all studies on the issue accept elements of uncertainty. “There’s a lot of shades of grey,” says Michel Rauchs, a research affiliate who works on the Cambridge index.

Rauchs points out that a slice of the mining in China comes from clean hydroelectric power, including with machines that are transported from the north to the south of the country on trucks each year in the wet season. That hydro power is not necessarily diverted from anywhere else; some of these power stations were founded for factories that no longer exist, Rauchs says. In those cases, “I don’t see that it’s necessarily a problem”, he adds. About 75 per cent of miners use some kind of renewable energy, Cambridge studies show, but renewables still account for less than 40 per cent of the total energy used. Some mining may also be conducted off-grid, making it harder to track.

All this nuance makes a difference. Still, the possibility of global official intervention to cut the industry’s energy consumption is an “existential threat”, says Rauchs.

Energy consumption on some scale is a feature, not a bug, of bitcoin — a digital currency launched by the pseudonymous Satoshi Nakamoto 12 years ago. Its detachment from the global financial and governmental system — still the most alluring feature for users seeking anonymity or wishing to bypass central banks — means it needs a new way to establish trust and security.

It does this by awarding miners coins in return for intensive puzzle-solving on the blockchain, making it a so-called “proof of work” coin. The puzzles are sufficiently hard to prevent hackers and other nefarious actors from taking control of the network, and the faster that miners can submit random numbers into the bitcoin algorithm, the more likely they are to unlock the coins. This all demands powerful machines running at full tilt.

Luckily for bitcoin miners with access to cheap energy and efficient machines, it is usually worth it. The price of bitcoin has dropped by about $30,000 apiece since the peak last month, but it has climbed by more than 200 per cent since late 2020 and more than 1,000 per cent since 2019.

Bitcoin is not the only energy-intensive cryptocurrency, but it is by far the biggest. Others include litecoin, ether and the light-hearted but rapidly growing dogecoin — initially an internet joke based on a Shiba Inu dog.

A March 2020 study by energy research journal Joule said bitcoin accounted for about 80 per cent of the market capitalisation of “proof of work” coins, of which an estimated 500 exist, and about two-thirds of the energy. “Understudied currencies add nearly 50 per cent on top of bitcoin’s energy hunger, which already alone may cause considerable environmental damage,” the study claimed.

Some cryptocurrencies are seeking to shift to a less energy-intensive “proof of stake” model, where a system allocates coins to verifiers, akin to miners, who put up coins for collateral. In the event of fraud, verifiers stand to lose their stakes, establishing trust through this channel rather than through energy-intensive “work”. Ether, the cryptocurrency native to the ethereum blockchain network, has been working on a shift to this model for more than two years, but the project is dogged by technical difficulties. Musk has also dangled the possibility that he could back other coins with a lighter energy impact.

A greener version of bitcoin is, in theory, possible. Bitcoin’s code could switch to a less energy-intensive consensus mechanism, whereby a new section of the blockchain ledger underlying the cryptocurrency would follow different rules. However, every miner would need to switch for the new path to work. Industry insiders say it is hard to imagine the entire bitcoin community, which is peppered with disagreements, lending support to such a plan.

Other ideas, such as labelling individual bitcoins as clean or dirty depending on the energy used to mine them, would also be hard to verify, and create a two-tier bitcoin system that was likely to lack support.

“Bitcoin could be the first inefficient version of a disruptive technology,” says Dr Larisa Yarovaya, a lecturer at Southampton university. “It should die for the common good of the planet and be replaced by a new model. It consumes more electricity than a country. All the rest is detail.”

Yarovaya, a former Russian Paralympic swimmer, frequently fields criticisms of her analysis and motivations from bitcoin proponents. She is undeterred, however. “It’s common sense,” she says. “[The energy consumption] is not justifiable by the high price of bitcoin. It is a speculative asset. It does not create a substantial amount of employment. It’s not widely used for transactions.”

Such concerns have not, however, sparked high-profile campaigning from environmental groups. Friends of the Earth, an advocacy group, says it is still getting to grips with the issue, as is Greenpeace, whose US arm started accepting bitcoin donations in 2014. After inquiries from the Financial Times, Greenpeace says it will now scrap the facility, which has not been heavily used. “As the amount of energy needed to run bitcoin became clearer, this policy became no longer tenable,” says Greenpeace.

Environmental concerns have also not deterred a clutch of investment banks from entering the sector, despite their public commitments to sustainable development goals: Citigroup said recently it was exploring what role it could play in crypto services; Goldman Sachs has reopened bitcoin derivatives trading; and Morgan Stanley plans to offer clients access to bitcoin funds. None of these banks wished to comment on the issue of energy consumption.

Yarovaya says public companies dabbling in cryptocurrencies have served to “validate” the asset class, pumping up prices and in turn indirectly cranking up the energy usage. “They need to explain themselves,” she says, adding that cryptocurrency buyers should also take individual responsibility for their contribution.

Nigel Topping, who was appointed by the UK government to co-ordinate with businesses over climate goals ahead of the COP26 talks later this year, says bitcoin is not likely to be on the agenda for climate discussions among governments in Glasgow, but it is starting to become a real issue in broader policy discussions. “It’s becoming one of the climate baddies,” he says. “People who care about climate are in a bit of dismay. It’s just a silly idea. Proof of work is proof of burning [fossil fuels]. It’s working directly against what we’re trying to do.”

The UN is also looking at ways it can prevent the growth of cryptocurrencies from undermining its work on climate change, and is supporting the “Crypto Climate Accord” initiative, led by the Rocky Mountain Institute, says Topping. The group is not aiming to slow innovation in digital finance, but wants to ensure that future blockchain-based projects are designed to consume less energy.

Max Boonen, a former banker and founder of cryptocurrency trading platform B2C2, says “there’s a cost” to the environment from this industry, some of which is balanced out by the benefits of bitcoin’s “censorship resistance”.

Do crypto market participants worry about the energy usage? “Not in the slightest,” says Boonen. “Anyone in this market feels comfortable enough about the environmental costs. If you think it’s a problem, you don’t participate.” Nonetheless Boonen says he considers himself to be an environmentalist. He offsets some of the carbon involved in his work through “effective altruism”, such as donations to charities.

Bitcoin proponents remain convinced that the benefits outweigh the costs, arguing that cryptocurrencies provide the basis for the financial system of the future. Some, such as Jack Dorsey’s Square and Cathie Wood’s Ark Investment, argued in a white paper that the bitcoin network could in fact incentivise the more rapid development of renewable energy. “Increasing bitcoin mining capacity could allow the energy provider to ‘overbuild’ solar without wasting energy,” the paper said.

Banks and asset managers keen to meet client demand for crypto services are looking at carbon offsets. Much heavier reliance on renewable energy would soften the blow, but would still draw criticism by diverting clean power from other parts of society. After protests by residents and green NGOs, the Greenidge project in New York state announced plans to make its bitcoin generation carbon neutral by buying carbon credits. The company says it is “committed to exploring and investing in renewable energy initiatives across the country”.

Mandy DeRoche, an attorney at Earthjustice, which is campaigning against this and other resurrections of what she calls “zombie” fossil fuel-based power plants, says Greenidge buying credits is “irrelevant” considering the amount of greenhouse gases emitted, and the time has come for a more serious look at potential regulation.

“People can get distracted by, like, ‘what is bitcoin and what does it do?’ Honestly I don’t care what bitcoin does. I care that it is hugely energy-intensive, and that there are maybe better ways to go about bitcoin mining than this very inefficient, very energy-intensive process,” she says.

Additional reporting by Ændrew Rininsland and Joanna S Kao

Where climate change meets business, markets and politics. Explore the FT’s coverage here 

Letter in response to this article:

Looking at bitcoin energy usage with a fresh lens / From Nima Tabatabai, Chief Product Officer, Modo Energy Co-Founder and Board Adviser, Optimize Infrastructure, London E3, UK

A cryptocurrency (or “crypto”) is a digital currency that can be used to buy goods and services, but uses an online ledger with strong cryptography to secure online transactions. Much of the interest in these unregulated currencies is to trade for profit, with speculators at times driving prices skyward.

The most popular cryptocurrency, Bitcoin, has had volatile price moves this year, reaching nearly $65,000 in April before losing nearly half its value in May. (You can check the current price to buy Bitcoin here .)

Here are seven things to ask about cryptocurrency, and what to watch out for.

Cryptocurrency is a form of payment that can be exchanged online for goods and services. Many companies have issued their own currencies, often called tokens, and these can be traded specifically for the good or service that the company provides. Think of them as you would arcade tokens or casino chips. You’ll need to exchange real currency for the cryptocurrency to access the good or service.

Cryptocurrencies work using a technology called blockchain. Blockchain is a decentralized technology spread across many computers that manages and records transactions. Part of the appeal of this technology is its security.

More than 10,000 different cryptocurrencies are traded publicly, according to CoinMarketCap.com, a market research website. And cryptocurrencies continue to proliferate, raising money through initial coin offerings, or ICOs. The total value of all cryptocurrencies on May 27, 2021, was more than $1.7 trillion — down from April high of $2.2 trillion, according to CoinMarketCap. The total value of all bitcoins, the most popular digital currency, was pegged at about $735 billion — down from April high of $1.2 trillion.

» Ready to invest? Here's our picks for best Bitcoin and cryptocurrency exchanges.

These are the 10 largest trading cryptocurrencies by market capitalization as tracked by CoinMarketCap, a cryptocurrency data and analytics provider.

Cryptocurrency

Market Capitalization

$735.3 billion

$324.2 billion

Binance Coin

$57.5 billion

$54.6 billion

$46.5 billion

$22.1 billion

$21.9 billion

Internet Computer

$16.7 billion

Data current as of May 27, 2021. 

» Learn more: How to invest in Bitcoin

Cryptocurrencies appeal to their supporters for a variety of reasons. Here are some of the most popular:

Supporters see cryptocurrencies such as Bitcoin as the currency of the future and are racing to buy them now, presumably before they become more valuable

Some supporters like the fact that cryptocurrency removes central banks from managing the money supply, since over time these banks tend to reduce the value of money via inflation

Other supporters like the technology behind cryptocurrencies, the blockchain, because it’s a decentralized processing and recording system and can be more secure than traditional payment systems

Some speculators like cryptocurrencies because they’re going up in value and have no interest in the currencies’ long-term acceptance as a way to move money

» Learn more: How to buy Ethereum

Cryptocurrencies may go up in value, but many investors see them as mere speculations, not real investments. The reason? Just like real currencies, cryptocurrencies generate no cash flow, so for you to profit, someone has to pay more for the currency than you did.

That’s what’s called “the greater fool” theory of investment. Contrast that to a well-managed business, which increases its value over time by growing the profitability and cash flow of the operation.

As NerdWallet writers have noted, cryptocurrencies such as Bitcoin may not be that safe , and some notable voices in the investment community have advised would-be investors to steer clear of them. Of particular note, legendary investor Warren Buffett compared Bitcoin to paper checks: “It's a very effective way of transmitting money and you can do it anonymously and all that. A check is a way of transmitting money too. Are checks worth a whole lot of money? Just because they can transmit money?"

For those who see cryptocurrencies such as Bitcoin as the currency of the future, it should be noted that a currency needs stability so that merchants and consumers can determine what a fair price is for goods. Bitcoin and other cryptocurrencies have been anything but stable through much of their history. For example, while Bitcoin traded at close to $20,000 in December 2017, its value then dropped to as low as about $3,200 a year later. By December 2020, it was trading at record levels again.

This price volatility creates a conundrum. If bitcoins might be worth a lot more in the future, people are less likely to spend and circulate them today, making them less viable as a currency. Why spend a bitcoin when it could be worth three times the value next year?

While some cryptocurrencies, including Bitcoin, are available for purchase with U.S. dollars, others require that you pay with bitcoins or another cryptocurrency.

To buy cryptocurrencies, you’ll need a “wallet,” an online app that can hold your currency. Generally, you create an account on an exchange, and then you can transfer real money to buy cryptocurrencies such as Bitcoin or Ethereum. Here's more on how to invest in Bitcoin.

Coinbase is one popular cryptocurrency trading exchange where you can create both a wallet and buy and sell Bitcoin and other cryptocurrencies. Also, a growing number of online brokers offer cryptocurrencies, such as eToro , Tradestation and Sofi Active Investing.  Robinhood offers free cryptocurrency trades (Robinhood Crypto is available in most, but not all, U.S. states).

» Learn more: Bitcoin wallet: How to choose the best for you.

There’s no question that they’re legal in the United States, though China has essentially banned their use, and ultimately whether they’re legal depends on each individual country. Also be sure to consider how to protect yourself from fraudsters who see cryptocurrencies as an opportunity to bilk investors. As always, buyer beware.

If you’re looking to buy a cryptocurrency in an ICO, read the fine print in the company’s prospectus for this information:

Who owns the company? An identifiable and well-known owner is a positive sign.

Are there other major investors who are investing in it? It’s a good sign if other well-known investors want a piece of the currency.

Will you own a stake in the company or just currency or tokens? This distinction is important. Owning a stake means you get to participate in its earnings (you’re an owner), while buying tokens simply means you're entitled to use them, like chips in a casino.

Is the currency already developed, or is the company looking to raise money to develop it? The further along the product, the less risky it is.

It can take a lot of work to comb through a prospectus; the more detail it has, the better your chances it’s legitimate. But even legitimacy doesn’t mean the currency will succeed. That’s an entirely separate question, and that requires a lot of market savvy.

But beyond those concerns, just having cryptocurrency exposes you to the risk of theft, as hackers try to penetrate the computer networks that maintain your assets. One high-profile exchange declared bankruptcy in 2014 after hackers stole hundreds of millions of dollars in bitcoins. Those aren’t typical risks for investing in stocks and funds on major U.S. exchanges.

Cryptocurrency is an incredibly speculative and volatile buy. Stock trading of established companies is generally less risky than investing in cryptocurrencies such as Bitcoin.

Of the online brokerages and cryptocurrency exchanges that NerdWallet reviews, the following current offer cryptocurrencies.

Available for:

Access to buy and sell more than 30 cryptocurrencies.

Read review

Trading platform with access to 15 cryptocurrencies.

Seven cryptocurrencies including Bitcoin, Bitcoin Cash and Ethereum.

SoFi Active Investing

Offers three cryptocurrencies for trading: Bitcoin, Ethereum and Litecoin.

TradeStation

Offers trading for five cryptocurrencies, including Bitcoin, Bitcoin Cash and Ethereum.

Offers four cryptocurrencies for trading: Bitcoin, Bitcoin Cash, Ethereum and Litecoin.

Disclosure: The author held no positions in the aforementioned securities at the original time of publication.

The price of Bitcoin has climbed back above $40K for the first time in roughly three weeks.

The passage over $40K may not have been exactly unexpected. However, after questions arose about whether or not the price of BTC would need to fall below $30K before a meaningful recovery was possible, the rise above $40K is certainly a sign that things are looking up. Some analysts are even eyeing $50K.

What’s happening?

One of the most significant pieces of news was, yet again, brought about by Elon Musk. Last month, Musk’s announcement that Tesla would no longer be accepting Bitcoin payments sent shockwaves through the market. Some analysts believe that the announcement contributed to market movements that triggered more than $12 billion in liquidations of leveraged positions.

However, on Sunday, Elon took a step back toward Bitcoin.

True to style, the announcement came in a tweet: “When there’s confirmation of reasonable (~50%) clean energy usage by miners with a positive future trend, Tesla will resume allowing Bitcoin transactions,” Musk wrote.

When there’s confirmation of reasonable (~50%) clean energy usage by miners with positive future trend, Tesla will resume allowing Bitcoin transactions.

— Elon Musk (@elonmusk) June 13, 2021

Musk was responding to a CoinTelegraph tweet linking to an article in which Magda Wierzycka, the Chief Executive of Sygnia, accused Musk of Bitcoin market manipulation. “What we have seen with Bitcoin is price manipulation by one very powerful and influential individual,” Wierzycka said in an interview with Bruce Whitfield at the Money Show this week, per CoinTelegraph’s report.

Musk responded by saying that: “this is inaccurate. Tesla only sold ~10% of holdings to confirm BTC could be liquidated easily without moving market,” and then going on to say that Tesla will begin accepting payments when the Bitcoin mining industry is confirmed at 50% clean energy.

The markets certainly seem to have responded to Musk’s announcement that Tesla has a theoretical path toward accepting Bitcoin payments in the future. On Sunday, before the tweet went out, the price of Bitcoin was hovering below $35K. After the tweet was posted, Bitcoin’s price shot to nearly $37K and has continued building momentum ever since.

However, not every member of the cryptocurrency community seems to be thrilled that Elon Musk is back. After announcing that Tesla would quit accepting Bitcoin last month, Musk drew ire from across the crypto industry.

For example, on June 5th, Ran Neuner, the creator and host of CNBC’s crypto trader, tweeted that: “Elon Musk’s irresponsible tweets have caused more people to get liquidated than any other Crypto event in history. Over 1 MILLION people have been liquidated, some losing their entire savings. These are the stats.”

— Ran Neuner (Non fungible) (@cryptomanran) June 5, 2021

Even hacking group, Anonymous took aim at Elon, accusing him of ‘playing dumb’ with regards to Bitcoin’s carbon footprint. Why? So that Tesla could continue earning energy subsidy payments from the US government.

What Are the Benefits of a Technology Driven Liquidity Provider?Go to article >>

“The energy use argument about proof-of-work mining is a very nuanced conversation that requires a fairly complex understanding of how power grids work and how excess energy is wasted by power companies and sought out by crypto miners,” an anonymous representative said in a video that was posted last week.

“This is a conversation that you have been having for over a year and were intimately aware of,” the rep said, going on to imply that Musk’s ‘divorce’ from crypto may have had hidden motives: ultimately, to “…centralize the industry and take it under your control.”

Now that Musk and Tesla appear to be taking a step back toward crypto, some crypto market participants appear to be skeptical.

For example, Blockstream CTO and Pixelmatic CEO, Samson Mow wrote in reply to Musk’s tweet about returning to BTC payments that: “So if we setup mining farms close to all Tesla Supercharging stations, we should be fine right? (sic)”

— Samson Mow (@Excellion) June 13, 2021

In other words, there is some belief that Musk could be trying to position Tesla’s clean energy production as a possible source of energy needed for Bitcoin mining. However, there does not appear to be any hard evidence that this is the case.

Ultimately, some analysts believe that Musk’s latest crypto-related comments are nothing more than an attention-grab.

In a statement shared with Finance Magnates, Bitfinex CTO, Paolo Ardoino said that: “Bitcoin is resurgent today as markets react positively to the words of a celebrity seeking to associate himself with the space,” Ardoino wrote. “The king of crypto is carrying cryptocurrency markets higher amid hopes that bitcoin miners will move towards a higher usage of renewables as their primary energy source.”

However, Ardoino, and many others, ultimately believe that Musk’s antics are a distraction from more meaningful growth happening in the Bitcoin and cryptocurrency sphere at large. “Meanwhile, bitcoin’s utility and use cases such as the Lightning Network continue to strengthen and grow,” Ardoino wrote. “While it is important to always take a long-term view with this incredible technology, we’re seeing a quiet optimism return to the market.”

Still, it is undeniable that Musk’s involvement in crypto will continue to have some effect on the crypto space for the foreseeable future.

Paul Haber, the CEO of Graph Blockchain Inc., said in a statement shared with Finance Magnates that: “The environmental implications of Tesla’s reacceptance of Bitcoin will most likely be insignificant because they aren’t likely to perform many transactions.”

However, Haber believes that Musk’s greatest influence on Bitcoin has to do with the narrative: “By far the biggest impact it will have is Elon educating the new users they introduce to the network about Bitcoin’s electricity use and his push for sustainability in the Bitcoin network.”

And, regardless of whether Tesla provides the energy or not, Bitcoin is facing a serious reckoning about its carbon footprint. The New York Times is among a myriad of news sources that have published countless articles highlighting Bitcoin’s environmental impact, particularly as its price rose throughout the course of 2021.

While Bitcoin advocates argue, as Anonymous did, that the conversation about exactly how much energy Bitcoin uses is ‘nuanced’, the fact remains that, at best, there is quite a bit of ambiguity surrounding the amount of carbon that Bitcoin releases into the atmosphere.

Industry leaders have taken up the issue with the creation of the Bitcoin Mining Council, which Musk is definitively not a part of. According to Business Insider, the current participants include business intelligence provider, MicroStrategy, investment management firm, Galaxy Digital, blockchain mining company, Argo, technology firm, Hive and mining company, Riot.

Beyond Elon Musk and renewable energy, Bitcoin’s price may also be enjoying a boost from several other pieces of positive news that have hit the airwaves this week.

Earlier this month, the Central American country of El Salvador became the first nation ever to accept bitcoin as legal tender. According to The Guardian, the decision came “as part of its technology-loving president’s proposals to use the cryptocurrency to promote ‘financial inclusion’, investment and economic development.”

Additionally, the Australian Financial Review reported today that Bitcoin’s price could be riding high off of the Taproot upgrade, “which was approved by the majority of bitcoin developers at the weekend.” Taproot was designed to improve privacy, efficiency and “most importantly, unlock the ability for smart contracts to take place on the bitcoin blockchain.” The upgrade is set to be completed by November.

More than a third of Britons are uninterested in buying into cryptocurrency because of a lack of regulation of the sector, new research suggests.

Some 34 per cent of the population, and three-quarters of people in their thirties familiar with the likes of bitcoin, ethereum and dogecoin said better consumer protections would make them likelier to invest.

According to exclusive research carried out for This is Money by cryptocurrency exchange Coinbase, half of those surveyed aged between 30 and 39 also said more accessible information would make them more interested in investing.

Charlie Barton, from the personal finance comparison site Finder, said: 'It makes sense that people want to learn a little more, and want reassurance that there's regulatory oversight before making an investment.'

Cryptocurrency investing has become increasingly mainstream among both everyday and institutional investors, which has helped propel the prices of cryptoassets like bitcoin to record highs over the past few months.

However, the industry remains unregulated in the UK and this, coupled with the intense volatility of the likes of bitcoin, means it can resemble something of a Wild West.

Since reaching an all-time high of more than $63,000 a coin in mid-April, the price of bitcoin has plummeted by 46 per cent in recent weeks, and currently sits at around $36,000.

The city regulator, the Financial Conduct Authority, has warned consumers they 'should be prepared to lose all their money' if they make such 'very high risk, speculative purchases'.

It has also banned everyday investors from purchasing crypto-derivatives which follow the price but do not provide investors with ownership, and can help magnify any losses.

Cryptocurrency exchanges, which allow investors to buy the likes of bitcoin, ethereum and a myriad of other cryptoassets, are currently only regulated by the FCA for money laundering and counter-terrorist financing purposes.

This means that while some appear on a list of regulated platforms, those who hold money with them do not have access to the Financial Ombudsman Service or the Financial Services Compensation Scheme safety net if things go wrong. 

Some banks have also banned investors from transferring money to cryptocurrency exchanges, while there are increasing concerns about 'get rich quick' cryptocurrency scams.

Coinbase's findings also revealed a sizeable proportion of people who claim to be 'somewhat familiar' with cryptoassets don't really know what they are.

Two in five said they didn't know what it is or how it is created, which is through 'mining' using computer programs, which rises to 63 per cent of those in their sixties. 

Only 4 per cent of those aged between 60 and 69 felt they had a good understanding of what cryptocurrency is.

Those findings are particularly stark given the increased concerns about fraud.

Close to 45 per cent of investment scams involving social media platforms between April 2020 and March 2021 were to do with cryptocurrency investing, according to the fraud reporting centre Action Fraud.

Often these involve fake celebrity endorsements, like this bitcoin scam we reported in 2019.

There were 5,039 reports of investment fraud stemming from social media platforms in all, Action Fraud said, with victims losing £12,500 on average.

Meanwhile high street bank NatWest said it received a record number of fraud reports about cryptocurrency in the first three months of this year.

The FCA has said prospective investors should be 'extremely cautious' before investing.

'Make sure that you check and carefully consider the cryptoasset business', it said on its website.

'You should know who you are dealing with and whether a cryptoasset is suitable, especially considering the risk of such products. 

'For example, when entering a business relationship, you may want to consider whether the business is based in the UK, or if it is registered with us.'

Glen Goodman, an investor and author of the book The Crypto Trader, said: 'I'm not surprised so many are reluctant to invest in crypto, as it's not protected by the FSCS.

'If you invest in the stock market and the trading platform goes bust - taking your money with it - you're eligible for up to £85,000 compensation. If the same happens with a crypto platform, you may lose everything.'

However, FSCS protection does not cover investors if their investments lose money or those companies go bust, only if the platform does. 

And this is only the case if an investment platform or provider is regulated by the FCA or the Bank of England's Prudential Regulation Authority and, as a result, the FSCS. It is important to check the FSCS's website, as well as that of your investment provider, to ensure you are covered.

Barton added: 'The stat that stood out was that 75 per cent of those in their thirties are waiting for regulation before making an investment in crypto. Those people are in a unique position.

'For them, it may not be a "YOLO" move into crypto - that's more for people in their late teens and twenties, who can afford the risk, with a lifetime of earning ahead of them.

'People in their thirties, however, may be looking to settle down, have a family and buy a house and it's a big risk to bet on "fake internet money". 

Meanwhile, they are too young to have enjoyed the wage growth, lower house prices, and more generous pension schemes that older generations enjoyed.'

Stablecoins, a type of cryptoasset pegged to an existing currency like the pound or dollar and used to make payments, are currently being consulted on as a means of payment by the Government, the FCA said.

If they were adopted, the FCA would likely work to regulate the sector and provide consumer protections.

Marcus Hughes, Coinbase's managing director for Europe, said of the findings: 'It is essential for us to understand why some consumers remain reticent to engage with crypto so that we can help to demystify the space and build their trust.

'It is unsurprising that a perceived lack of regulation around cryptocurrencies unsettles some people.'

Currently, only four cryptocurrency exchanges are fully registered with the FCA. 

Dozens more, including well-known names such as eToro and Revolut, have been placed on a temporary permissions register introduced at the end of last year.

This was due to expire next month, but on Thursday morning was extended until March 2022 to give exchanges more time to work with the regulator. 

Coinbase is not listed on the FCA exchange as it provides crypto services to UK customers from an Ireland-based entity called Coinbase Europe.

It will soon register with the Central Bank of Ireland due to it launching a similar registration regime to the FCA. 

Hughes added: 'If the industry is to gain the trust of the broader public, it is essential that further regulation is implemented consistently across the board.'

Goodman added: 'The sensible thing to do is buy crypto through a platform and then transfer it into your own private virtual wallet for protection. The problem is that's a fiddly process and people sometimes lose their passwords and their cryptocurrency.

'It would be much easier if the FCA extended their protective umbrella to crypto investors, so they could invest using intuitive platforms and apps, with the peace of mind the FSCS provides.'

Charlie Barton also agreed cryptoasset investing 'needs more regulatory infrastructure around it.'

Asked by This is Money whether it would consider this in light of the findings, the FCA said its remit was a matter for the Government.

Dealing cryptocurrency, a winning hand: How Americas Cardroom went to bat for the industry

No matter how you measure success, 2021 is shaping up to be a gangbuster year for cryptocurrency.  Bitcoin and other blockchain assets have not only experienced explosive growth in the past few months, but they also continue to command headlines day after day — and not just in the cryptocurrency and financial press.

Bitcoin and even lesser known crypto options like Dogecoin are now household names.  Whether you want to thank the huge speculative gains banked by traders, the clever memes on social media, or the late-night comedy shows that poke fun at crypto, there’s no denying that crypto’s moment is now.

Although it’s true that your local coffee shop likely doesn’t accept Bitcoin and you probably can’t pay for your haircut with Ethereum, mainstream adoption is getting closer every day.  Over the past 12 months, PayPal, which is the world’s leading online payment service, added crypto services to its platform.  More recently, several of America’s best-known financial institutions, including JPMorgan Chase & Co., BNY Mellon, and Wells Fargo Wealth & Investment Management, have all come to embrace digital assets in varying capacities.  That’s particularly noteworthy given their earlier skepticism.

And let’s not forget the biggest cryptocurrency development of the year to date, which saw Tesla add crypto to its balance sheet and accept Bitcoin as payment for car purchases.  Even if the EV manufacturer has temporarily suspended Bitcoin as a payment method due to environmental concerns, Elon Musk & Company did showcase the viability of crypto in a big way.

Yet as exciting as all these developments are, it’s the early adopters who deserve recognition.  Without yesterday’s innovators taking a chance on formerly novel and unproven technologies, cryptocurrency would be little more than a footnote in the dustbin of history, rather than the glowing success story it is today.

While there’s certainly no shortage of Bitcoin pioneers worthy of our praise, popular interactive gaming site Americas Cardroom deserves credit for accepting Bitcoin when few would.  The leading US-facing poker room, which also offers a full-fledged sportsbook and range of casino games, processed its first Bitcoin transaction in 2015.

Americas Cardroom’s willingness to accept Bitcoin was born out of necessity not novelty.  As a global poker site, Americas Cardroom has always been forced to navigate what amounts to a tangled web of diverse regulations.  Not only do the rules that govern gaming vary widely from jurisdiction to jurisdiction, but financial institutions in some countries refuse to process poker transactions even where it is fully legal.

What’s far worse for players is that the conventional banking system is surprisingly unpredictable.  You don’t have to look far for player complaints about banks arbitrarily refusing to authorize gaming transactions on credit cards and debit cards, even when those cards have worked perfectly before.

Fortunately, the solution to Americas Cardroom’s problem and the frustration of its players was simply to think outside the box or, more specifically, outside the traditional banking system.  That’s precisely where Bitcoin came into play.

By accepting Bitcoin, Americas Cardroom instantly removed the biggest obstacles that stood in the way of poker players and the game they love.  And it’s been quite a lasting love affair, with Bitcoin accounting for just 2% of all transaction on Americas Cardroom in 2015, but more than 60% today.

What’s even more interesting is that Americas Cardroom opted to keep its crypto strategy simple.  Unlike some other crypto gaming sites, Americas Cardroom doesn’t revolve around Bitcoin, nor does it cater to crypto fanatics or players who are explicitly tech savvy.  Instead, the site offers Bitcoin as a deposit and withdrawal method alongside conventional banking options such as credit cards, giving players a choice.  The poker site has also spent a great deal of effort creating tutorials to assist Bitcoin newbies and extoling the benefits of crypto, especially surrounding safety, security, privacy, and convenience.

Back to simplicity, every tournament entry fee, prize pool, and bet on the site is denominated in US dollar.  That means that players also know how much they stand to win or lose at every stage of the game, which is particularly important given the high volatility of cryptocurrency.

Americas Cardroom achieves this feat rather easily.  When a player deposits Bitcoin, the site converts the funds to US dollars instantly. A player can use their US dollar bankroll to enjoy all their favorite games without thinking about cryptocurrency exchange rates. Then when it’s time to cash out, Americas Cardroom converts the funds back to Bitcoin.  Once the funds are in the player’s crypto wallet, they can easily transfer the money to their bank account or do whatever they see fit with it.

Even though Bitcoin is the most popular crypto by far, it’s just one of the cryptocurrencies that Americas Cardroom accepts.  Over the past few years, Americas Cardroom has rolled out support for dozens of cryptocurrency options, including Ethereum and Ripple. With 60 different cryptos available for both deposits and withdrawals, the poker site isn’t playing favorites.  It knows full-well that the blockchain is the future, even if it isn’t abundantly clear which options will gain mass adoption.

Americas Cardroom’s support of Bitcoin has helped fuel its growth.  The poker room has seen traffic rise steadily over the past two years with no sign of waning.  The site’s $5 Million Venom PKO, which was advertised as the world’s biggest progressive knock out tournament, easily beat its guarantee due to excessive demand.  It’s safe to say that the $7.16 Million final prize pool was heavily stoked by crypto.

While being first of the gate is no guarantee of success—just ask past giants like Kodak, Atari, or Yahoo!—Americas Cardroom’s competitors have a lot of catching up to do when it comes to crypto.   Not only are competing sites years behind Americas Cardroom when it comes to cryptocurrency, but Americas Cardroom has proven that it’s never content to rest on its laurels.  We can’t wait to see what they have planned next.

For more information about Americas Cardroom visit americascardroom.eu.

The cryptocurrency boom doesn't look set end anytime soon with new research suggesting Britons are more interested in bitcoin and alt-coins than in stocks and shares Isas. 

Cryptocurrencies, led by bitcoin, have enjoyed a bull run this year as the likes of Mastercard, Tesla and JP Morgan all voiced support.

A survey conducted on behalf of DIY investment platform AJ Bell suggests 7 per cent of Britons bought into cryptocurrencies over the last year.

That compares to 5 per cent who have invested in a stocks and shares Isa, HMRC data published last week shows.

Stocks and shares Isas are a popular choice for those who want to put money into a range of different investments, which include individual shares, investment trusts and gilts, with a tax-free limit of £20,000 each financial year.

'When more people are buying cryptocurrency than investing in a stock market Isa, you have to conclude the world's gone crypto crazy,' Laith Khalaf, financial analyst at AJ Bell said.

Analysts have been broadly sceptical of the recent popularity of crypto, particularly given much of the volatility has been tied to Tesla boss Elon Musk's tweets.

Bitcoin is back above $40,000 after Musk tweeted the electric car company would resume accepting bitcoin once it becomes environmentally friendly on Sunday.

In February, Tesla said it had invested $1.5billion in bitcoin and would start to accept it as a form of payment for its cars. 

However, last month Musk reversed this position citing environmental concerns. 

Other cryptocurrencies also rose on Musk's comments, with the second-largest crypto ethereum rising to trade above $2,600. 

'It's possible that cryptocurrencies will ultimately prove to be profitable in the long run, though that's still highly debatable,' Khalaf said.

A large proportion of consumers will be sitting on decent profits if they bought into crypto at the right time, but Khalaf warns the inherent volatility means profits can be wiped out quickly.

By contrast the stock market has staged a recovery since the initial shock of the pandemic which saw the FTSE 100 suffer its largest one day crash since 1987. 

It is currently trading up 9.2 per cent year-to-date.

AJ Bell's research shows 12 per cent of crypto investors reported making a loss in the past year. 

Meanwhile, 17 per cent said they do not even know if they're in the black or the red with their crypto investments, and the vast majority admit to not understanding how cryptocurrencies work at all.

The findings were based on 1,269 respondents by findoutnow.

'It certainly looks like some consumers are jumping into the deep end with cryptocurrencies, before learning how to swim in shallower waters,' Khalaf said.

More and more trading apps are offering younger and less experienced customers the opportunity to invest in riskier assets like crypto.

'For many investors, having a side hustle investment gives them the opportunity to flirt with something racy, alongside their conventional Isa or SIPP,' Jessica Galletley from Boring Money said. 

'This is OK as long as they do it with their eyes wide open and recognise the risks involved.'

The Financial Conduct Authority has already warned younger investors of the dangers of speculative and illiquid assets. 

Cryptocurrencies are most popular among younger men, recent Boring Money research shows, with 40 per cent of male investors under 45 saying they would consider crypto or have already purchased some.

'There's no harm in buying crypto if you have lots of other bases covered with your finances, and any losses won't affect your overall wealth too badly,' Khalif said. 

'Younger people do have more confidence in their understanding of cryptocurrencies, but the youthful profile of crypto buyers suggests they may have accumulated few assets so far and could find their finances seriously damaged if crypto markets take a turn for the worse.'

WHAT IS BITCOIN? 

You'll often hear it described as a cryptocurrency, which isn't very enlightening. In simple terms, it is virtual money, with no physical notes or coins. It was invented by someone claiming to be called Satoshi Nakamoto and to be Japanese, but his or her real identity is unknown. In its early days it was often used for illicit activity but bitcoin has become attractive to ordinary investors. 

Bitcoins are stored in a digital wallet on smartphones or computers. Transactions are recorded on Blockchain, the giant online ledger behind the currency. You can in theory use bitcoin to pay for goods and services, though they are not accepted everywhere. Or you can buy it in the hope of a profit. 

Anyone with access to a computer or smartphone can buy bitcoin through an exchange. You will have to pay trading fees on top of the cost of the bitcoin itself. 

Bitcoin is not backed by any tangible asset or underlying commodity such as gold, so it has no intrinsic value. It is 'worth' what people are prepared to pay – and that has been extremely volatile. Last March, one bitcoin was worth round $5,000. After a spectacular rally around Christmas, it surpassed $41,000 in the first week of January and climbed to beyond $60,000 by mid-April. Currently it is at $40,000. 

It depends on whether you believe bitcoin will rise in value. It's a huge risk. City watchdog the FCA recently reminded savers that they should be prepared to lose all the money they put into bitcoin, so only invest cash you can afford to lose. If things do go wrong, dealings in bitcoin are largely outside the regulators' safety nets.

The recent volatility in bitcoin prices triggered by Tesla’s Elon Musk has raised new doubts among institutional fund managers over the future of cryptocurrencies as an asset class.

UBS Wealth Management, Pimco, T Rowe Price and Glenmede Investment Management were among the firms that have expressed reservations in recent days about the potential of cryptocurrency investments.

The upheaval came after Tesla said it would no longer accept payment in bitcoin for its electric vehicles owing to environmental concerns, and Musk jokingly referred to dogecoin, a rival cryptocurrency, as a “hustle” during an appearance on the Saturday Night Live television show.

“Our stance with clients is the 10-foot pole rule: stay away from it,” said Jason Pride, chief investment officer of private wealth at Glenmede. “I don’t think the Fed and other regulators are fans of the current market structure for cryptocurrencies.”

Rob Sharps, president and head of investments at T Rowe Price, told the Financial Times: “Crypto has an impact across capital markets, and we’re capital markets experts. Ultimately, the mandates we manage for clients are not well suited for investing in cryptocurrencies, and we recognise the high level of speculation in this space.”

Highlighting the extreme volatility, bitcoin traded at just above $44,000 on Monday, down about $20,000 from the record high it hit just a month ago. The latest tumult was sparked by Musk seeming to imply on Twitter that Tesla has or will sell the stake it has accumulated in bitcoin. He later clarified that the automaker “has not sold any bitcoin”.

To be sure, bitcoin has gained ground with investors in recent years and trading in futures contracts has become more liquid. US regulators are also considering whether to approve crypto exchange traded funds.

But asset managers say they are troubled by signs that cryptocurrencies are failing to live up to expectations that they would become less volatile over time or offer investors hedges against equity turbulence or inflation.

“The volatility of crypto is stratospherically high and we often see that, when equities sell off, so does bitcoin and that means it is not a good portfolio diversifier,” Pride said.

Nicholas Johnson, portfolio manager for commodities at Pimco, took issue with bitcoin advocates who praised it as an inflation haven after cryptocurrencies rallied while gold fell in price.

“This idea that crypto is an inflation asset is curious,” he said. “Inflation assets underperformed in recent years while cryptocurrencies did very well. People are looking for a reason to justify why crypto has gone up.”

Cryptocurrency anxieties were further exacerbated this week when a leading US regulator warned investors that buying mutual funds with exposure to bitcoin futures “is a highly speculative investment” — and warned mutual funds that it would be subjecting their involvement with the cryptocurrency to intense scrutiny.

The Division of Investment Management at the Securities and Exchange Commission said: “Investment in the bitcoin futures market should be pursued only by mutual funds with appropriate strategies that support this type of investment and full disclosure of material risks.”

“We expect more stringent policy and regulatory controls ahead for crypto as it becomes more mainstream,” UBS Wealth Management said, adding that the price volatility that followed the Tesla announcement “highlights risks companies face if they take on crypto balance sheet exposure”.

Tom Jessop, head of digital assets at Fidelity, which has been more receptive to cryptocurrencies, nevertheless cautioned that such investments were still in the early stage of development.

“We refer to bitcoin as an aspirational store of value and it’s an adolescent in terms of its development due to the extreme volatility,” he said. “Some investors are willing to accept the volatility as they see bitcoin as a long-term venture opportunity.”

Robert Armstrong dissects the most important market trends and discusses how Wall Street’s best minds respond to them. Sign up here to get the newsletter sent straight to your inbox every weekday.

Fidelity provides a brokerage service that enables more than 100 institutional investors such as hedge funds and family offices to buy cryptocurrencies and offers them custodian services. Fidelity has a small fund that invests in digital assets for clients and its has applied to the SEC to launch an ETF for bitcoin.

Even if asset managers shy away from crypto, swings in its valuations are a concern for the industry because of the growing power of retail traders to cause volatility in the equity market, known as the “substitution effect”.

“Watching what retail investors are doing is as important as bond flows to managers now,” said Viraj Patel, an analyst at Vanda Research. “They are asking, if millennial capital is buying bitcoin, does this mean they’re going to stop buying high-beta US stocks?”

For the latest news and views on fintech from the FT’s network of correspondents around the world, sign up to our weekly newsletter #fintechFT

Sign up here with one click

The Biden administration recently met with other government officials, including staff members at the Treasury Department, to discuss the risks presented by the extreme volatility in cryptocurrency markets, the Washington Post reported on Tuesday, and how to prevent illicit activities that use crypto.

The White House has also discussed the matter with the Treasury department’s Office of the Comptroller of the Currency and the Consumer Financial Protection Bureau, although these talks did not include most senior-level officials like Treasury Secretary Janet Yellen, two unnamed individuals told the Post.

Biden officials are reportedly looking at possible “gaps” in oversight of the crypto market, and whether such gaps might be exploited to fund illicit or terrorist activities, the Post reported.

They also discussed possible ways to protect retail investors who want to purchase cryptocurrency.

Although federal regulators don’t currently believe the massive swings in crypto prices pose a threat to overall financial market stability, they contend such risks are worth monitoring, the Post noted.

Forbes has reached out to the White House, Treasury Department and the CFPB for comment.

“[Federal officials are] aware of the fact that there are all kinds of risks [related to crypto] in the abstract and things to look out for, but they are still largely in a wait-and-see posture,” an unnamed person briefed on the discussions told the Post. 

Last week, the Treasury Department revealed a plan to raise $700 billion over the next 10 years to help fund Biden’s $1.8 trillion American Families Plan which included new tax enforcement provisions that seeks to put pressure on cryptocurrencies, crypto asset exchanges and crypto payment services to report transactions to the Internal Revenue Service in order to uncover unreported income or to detect incidences of tax evasion, money laundering and other illicit activities. The plan would also compel businesses to file a current transaction report if they receive cryptocurrency valued at more than $10,000 (as they are currently required to report cash payments above $10,000). Meanwhile, Bitcoin, the largest and most popular cryptocurrency, traded at around $38,000 on Tuesday at 1:20 p.m., a 36% plunge from May 9, partly due to worries about Chinese regulatory crackdowns on cryptocurrency transactions as well as comments made by Tesla chief Elon Musk about the climate impact of mining Bitcoins. Bitcoin hit an all-time high of almost $65,000 in mid-April.

Luke Lloyd, wealth advisor and investment strategist at Strategic Wealth Partners in Independence, Ohio, told Forbes that government regulation of crypto markets isn’t “necessarily a bad thing” as long as it doesn’t completely ban cryptocurrency. But he cautions that regulation can kill innovation, and could restrict the free markets from working properly. “In the end, the issue of volatility in the cryptomarkets will fix itself if cryptocurrency becomes what it’s supposed to, at least for the larger coins like Bitcoin and Ethereum,” he said. “As more players and money get involved with Bitcoin and Ethereum, the market cap will rise. As the market cap rises, volatility will shrink.”

$1.63 trillion. That’s the current total market cap of the entire crypto market, according to CoinMarketCap, however that figure has dropped about 36% from a peak of about $2.53 trillion in early May.

On Monday, Federal Reserve board governor Lael Brainard promoted the idea of a cryptocurrency backed by the central bank, saying it would, among other things, help to provide financial services to the 20% of Americans who are “underbanked.” In a speech at a conference presented by Coindesk, a crypto news site, she said: “We must explore, and try to anticipate the extent to which households’ and businesses’ needs and preferences may migrate further to digital payments over time.” She added that a digital dollar would be a “new type of central bank money issued in digital form for use by the general public.” Last week Fed Chairman Jerome Powell said the central bank plans to release a working paper this summer on the various facets of central bank digital currencies, suggesting the Fed is getting serious about the matter.

Allianz chief economic adviser Mohamed El-Erian warned on Monday that volatility is likely to be a permanent feature of cryptocurrencies.  “I think the volatility will continue,” he told CNBC. “The roller coaster, the up and down. We’ve traded in the $30,000 to $44,000 price range [for Bitcoin] in a week, that’s enormous.”

Elon Musk And Michael Saylor Lead Effort By Bitcoin Miners To Address Environmental Concerns (Forbes)

Billionaire Ray Dalio Reveals Bitcoin Investment But Warns Of Regulation Rocking Crypto Markets (Forbes)

What Is Bitcoin And How Does It Work? (Forbes)

I have more than 20 yrs experience in writing about financial markets. I am especially interested in history and literature.

Cryptocurrency investing has been one of the big news stories of 2021. Although the first Bitcoin was mined way back in 2009, it wasn’t until Bitcoin millionaires began being minted that crypto started grabbing the public’s attention. Now, new coins have flooded the market, and more millionaires have been created, as some coins have rallied 1,000%, 2,000% or even more. In the midst of all of these incredible gains, the natural question is whether or not it’s too late to invest in cryptocurrency. The truth is that no one can guarantee whether crypto will rise or fall from here, as it’s an entirely new market that is neither well-defined nor well-regulated. But there are clear arguments on both sides of the coin as to whether it’s time to buy or not.

Check Out: 10 Best Cryptocurrencies To Invest in for 2021 Consider: Dogecoin: Is It Still Worth an Investment?

One of the fears of entering the crypto market has always been that governments around the world will shut down acceptance and even production of the coins. That time may already be here. In late May 2021, China began cracking down hard on bitcoin mining and trading, which sent crypto prices cascading downwards. According to Boris Schlossberg, managing director at BK Asset Management, the primary reason for this crackdown was because “Chinese authorities are keen to see their own digital currency in the form of the yuan become the primary unit of account in the Chinese economy.” If other governments follow suit, demand and support for Bitcoin and other cryptocurrencies could falter.

The Economy and Your Money: All You Need To Know

If you’re a believer that the crypto market is another version of the stock market, there might be no better time to buy cryptos like Bitcoin because they are on sale. As of June 4, Bitcoin was more than 40% off its all-time high, and other cryptos had fallen by a similar amount or even more. As the history of Bitcoin has shown, massive drops like this are not at all unusual, and yet the cryptocurrency has managed to consistently climb to new highs. If you were curious about Bitcoin a few weeks ago, the current sell-off might be a chance to dip your toe into the market.

Explore: What Are Altcoins — and Are the Potential Rewards Worth the Risks?

Skeptics believe that cryptocurrency is an asset class with no store of value, no barrier to entry and no value as an exchange currency. As such, skeptics view crypto as simply a speculative asset class with no long-term viability as a true asset class. At a CNBC-hosted panel in Davos, Switzerland in 2019, Jeff Schumacher, founder of BCG Digital Ventures, had this to say about Bitcoin: “I do believe it will go to zero. I think it’s a great technology but I don’t believe it’s a currency. It’s not based on anything.” In 2020, famed investor Dennis Gartman offered the same assessment to Bloomberg, saying that if central banks “refuse to give up their monopoly on monetary policy, ” Bitcoin could one day plunge to zero.

Read: Where Does Cryptocurrency Come From?

Rather than seeing Bitcoin go to zero, believers like Ark Investment’s Cathie Wood suggest quite the opposite. The popular investment strategist and CEO believes that Bitcoin will actually hit $500,000. Part of the reason for Wood’s bullishness is her belief that asset managers will eventually allocate up to 5% of their portfolios to cryptocurrency. Greg Cipolaro and Dr. Ross Stevens, researchers at New York Digital Investment Group, support this belief, adding that “Increasing fundamental demand combined with a fixed supply and automatically declining supply growth make a compelling case for Bitcoin as an alternative investment for institutional investors.” The researchers are referring to the fact that the supply of Bitcoin is limited to 21 million coins.

More From GOBankingRates

Jaw-Dropping Stats About the State of Retirement in America

How To Keep Your Financial Planning On Track in 2021

20 Home Renovations That Will Hurt Your Home’s Value

27 Things You Should Never Do With Your Money

Last updated: June 9, 2021

This article originally appeared on GOBankingRates.com: Is It Too Late To Invest In Cryptocurrency?

When you subscribe we will use the information you provide to send you these newsletters. Sometimes they'll include recommendations for other related newsletters or services we offer. Our Privacy Notice explains more about how we use your data, and your rights. You can unsubscribe at any time.

India's predicted move could have a very positive effect on the price of bitcoin as the nation is the world's sixth-largest economy. This could open up a $10trillion economy to bitcoin investment and daily transactions. About the possibility of India following El Salvador's lead, editor at Invezz, Jayson Derrick said: “Encouraging developments in the move towards greater adoption of bitcoin aren’t limited to poorer countries.

"India, a G20 member with a $10trillion economy, is reportedly close to classifying bitcoin as an asset class”.

Referring to the trajectory of mainstream adoption of the world's preeminent cryptocurrency, bitcoin pioneer Max Keiser told Express.co.uk: "India, like all nations, will follow El Salvador and make bitcoin their official currency.

"I can say this with 100 percent certainty because Game Theory is hardcoded into the bitcoin protocol, reckless money printing by central banks is unstoppable, and the best safe-haven asset in the world is bitcoin."

Many Latin American nations such as Mexico, Colombia, Argentina and Brazil, with economies that struggle with inflationary issues, may follow the example set by El Salvadoran lawmakers who made bitcoin legal tender on June 8, 2021.

The text of the law ratified by the El Salvadoran congress stated that “every economic agent must accept bitcoin as payment when offered to him by whoever acquires a good or service".

Already financial institutions and experts are looking at El Salvador's move as a "historic" precedent.

Avik Roy, president of the Foundation for Research on Equal Opportunity, said the move would “transform El Salvador into one of the world’s most important financial centres, and affect the way people around the globe use digital currencies".

The price of bitcoin jumped by 12 percent today partially in reaction to the announcement that billionaire US investor Paul Tudor Jones would transfer 5 percent of his balance sheet into the cryptocurrency.

READ MORE: Universal Basic Income: Adults aged 18-64 in UK trial could get £213

Speaking to CNBC today Mr Jones said: "Bitcoin is math and math has been around for thousands of years, and two plus two is going to equal four, and it always will for the next two thousand years.

"So, I like that idea of investing in something reliable, honest, secure, and 100 percent certain.

"Bitcoin has an appeal to me in being able to invest in certainty."

More news that has helped bolster a renewed positive sentiment in bitcoin is Tesla's announcement it will Tesla accept bitcoin payments once Miners Use 50 percent “clean energy”.

DON'T MISS Chris Evans admits he 'doesn't know why' people still listen to him  [INSIGHT] Cryptocurrency price crash: Bitcoin, Ethereum, Dogecoin value PLUMMETS  [EXPLAINER] Bitcoin tipped to be 'universal currency' despite Trump's 'scam' claim  [ANALYSIS]

Tesla CEO Elon Musk was lambasted by Sygnia CEO Magda Wierzycka who said, “what we have seen with bitcoin is price manipulation by one very powerful and influential individual."

Yesterday the Tesla CEO responded with a revealing tweet: "This is inaccurate.

"Tesla only sold 10 percent of holdings to confirm bitcoin could be liquidated easily without moving market.

"When there’s confirmation of reasonable, 50 percent plus, clean energy usage by miners with positive future trend, Tesla will resume allowing Bitcoin transactions."

When you subscribe we will use the information you provide to send you these newsletters. Sometimes they'll include recommendations for other related newsletters or services we offer. Our Privacy Notice explains more about how we use your data, and your rights. You can unsubscribe at any time.

The bank, called Xapo, is an entity that specialises in cryptocurrencies. It provides a bitcoin wallet combined with a cold storage vault and a bitcoin-based debit card. Xapo has been granted a European e-money license in Gibraltar which has allowed it to provide electronic fiat money custodial and transfer services.

Gibraltar’s Finance Minister Albert Isola told news outlet Decrypt: “Xapo have now established themselves in Gibraltar as a fully-fledged bank."

A representative from international law firm Isolas LLP, Joey Garcia spoke about how Gibraltar is extending its regulatory guidelines for digital asset exchanges.

Mr Garcia said: “The framework aims to guide those who have the potential to form important foundational concepts for the work of other international organisations, such as the Financial Action Task Force, the European Commission and the International Organisation of Securities Commissions (IOSCO).

“Gibraltar has long been a leader when it comes to fostering innovation and in the development of virtual asset service providers’ regulatory standards and we are confident the 10th Core Principle will aid us even further in our mission to achieve this.

READ MORE: Universal Basic Income: Adults aged 18-64 in UK trial could get £213

“Particularly as the integrity of these markets is such a key focus internationally.

"We already have some of the largest groups in the world regulated in Gibraltar and this should continue to place those groups at the forefront of standard-setting in the industry,”

Xapo is capitalising on the boom in cryptocurrencies and was founded by the Argentine businessman Wences Casares.

The bank now has its physical headquarters in Grand Casemates Square, Gibraltar.

DON'T MISS Chris Evans admits he 'doesn't know why' people still listen to him  [INSIGHT] Cryptocurrency price crash: Bitcoin, Ethereum, Dogecoin value PLUMMETS  [EXPLAINER] Bitcoin tipped to be 'universal currency' despite Trump's 'scam' claim  [ANALYSIS]

The bank is the first such entity in Europe to have a physical branch.

Within the Xapo building is a series of ATMs where customers can manage their cyber-currency transactions.

Another hint of the forward-thinking atmosphere at the bank's headquarters is the fact that the furniture within has been manufactured using 3D printing technology.

A statement from the new bank said: "Xapo exists to provide you with the gold standard of protection for your wealth.

"Now that we’ve established ourselves in Gibraltar and acquired a banking license, we’re thrilled to be able to offer you a full-fledged suite of financial tools.

"Xapo is a licensed bank regulated by the Gibraltar Financial Services Commission (GFSC).

"Your funds are safe in a crypto-friendly financial hub with a lengthy history of outstanding legal protections for consumers."

The company has described how "the private keys that lock your bitcoins away are protected from every angle" in a deep vault within the Swiss Alps.

Xapo state that they have employed a global team of experts in financial crime and use the latest in blockchain analysis technologies to ensure that savings are kept secure.

The bank plans to focus on clients “mostly in emerging markets."

Speaking to Coindesk the bank's founder Mr Casares said that these clients must have between $30,000 and $1million in funds to invest in cryptocurrencies.

When you subscribe we will use the information you provide to send you these newsletters. Sometimes they'll include recommendations for other related newsletters or services we offer. Our Privacy Notice explains more about how we use your data, and your rights. You can unsubscribe at any time.

The nation became the first country in the world to adopt bitcoin as legal tender at the beginning of June. El Salvador's president Nayib Bukele responded to the ratification of the 'bitcoin law' in the nation's congress by stating on Twitter: "This is going to evolve fast!" Now the president has instructed the geothermal energy sector to utilise the nation's 22 major volcanos to power "bitcoin mining hubs".

The president of El Salvador Nayib Bukele tweeted: "Our engineers just informed me that they dug a new well, that will provide approximately 95MW of 100 percent clean, zero-emissions geothermal energy from our volcanos Volcano.

"Starting to design a full Bitcoin mining hub around it."

The initiative could see El Salvador make revenues in excess of "$250 million per year".

George Kikvadze of the Global Blockchain Business Council responded to the tweet and said: "Dear President Nayib Bukele, 95MW can generate 3 Exahashes which is around 600 bitcoin in revenue per month or $250 mln per year.

"I am confident with these metrics you can structure a proper JV with credible investors and take care of IMF once and for all."

Speaking about El Salvador's move bitcoin pioneer Max Keiser told Express.co.uk: "Bitcoin was designed to be a central bank killer.

"The IMF will probably be the first to go.

"I’ve advised El Salvador to create new ‘Volcano Bonds’ backed by future bitcoin mining revenues to recapitalise their balance sheet and retire the IMF loans.

"I know of two banks in New York that are working on this now.

"Property prices in El Salvador are set to triple this decade as several countries in the region; Argentina, Guatemala, Paraguay and others will announce shortly they are following El Salvador’s example.

"Other central banks such as the Bank of England and the Federal Reserve Bank in America are also at risk of being disintermediated as bitcoin rises to become the world’s reserve currency."

Mr Keiser has suggested 'Volcano Bonds' should be floated to finance El Salvador's geothermal bitcoin mining operations.

He tweeted to the CEO of Galaxy Investment Partners: "What about you guys floating $1 billion in 'Volcano Bonds', backed by future bitcoin mining output for El Salvador to pay off the IMF."

It was not long before finance giant JP Morgan took notice of events and warned that El Salvador's decision to adopt bitcoin as legal tender will jeopardise its negotiations with the International Monetary Fund, IMF.

READ MORE: Universal Basic Income: Adults aged 18-64 in UK trial could get £213

Commenting on the move, the JPMorgan client note stated: “As with the dollarisation in the early-2000s, this move does not seem motivated by stability concerns, but rather is growth-oriented.

"But it is difficult to see any tangible economic benefits associated with adopting bitcoin as a second form of legal tender, and it may imperil negotiations with the IMF.”

Responding to the news, George from Cryptosrus said major financial institutions such as JP Morgan are criticising the move by El Salvador because "they want to maintain their power".

He added global financial institutions were "going after El Salvador for trying to free itself from the International Monetary Fund, IMF".

DON'T MISS Chris Evans admits he 'doesn't know why' people still listen to him  [INSIGHT] Cryptocurrency price crash: Bitcoin, Ethereum, Dogecoin value PLUMMETS  [EXPLAINER] Bitcoin tipped to be 'universal currency' despite Trump's 'scam' claim  [ANALYSIS]

El Salvador is currently talking to the IMF about securing a $1.3 billion loan to revitalise its economy.

This will then add to El Salvador's current outstanding IMF debt of $7.7 billion.

In 2001, the nation switched from using its former currency, the colón, to official use of the US dollar.

However, financial experts pointed to this switch as leaving the country financially susceptible during the downturn experienced due to the coronavirus caused monetary crisis.

El Salvador is very susceptible if the dollar goes inflationary due to money printing by the US Federal Reserve.

One Twitter commentator suggested that El Salvador is "the first country to vaccinate its citizens against hyperinflation" because of its adoption of bitcoin.

When you subscribe we will use the information you provide to send you these newsletters. Sometimes they'll include recommendations for other related newsletters or services we offer. Our Privacy Notice explains more about how we use your data, and your rights. You can unsubscribe at any time.

Cryptocurrency markets have seen intense levels of volatility with most large digital coins impacted. Miners have suspended Chinese operations as a crackdown in the country has deepened. This is having a huge effect on the performance of digital currencies across the board, but will the trend continue?

The crypto market remains uncertain in the way of mining operators including Huobi Mall, HashCow and BTC.TOP suspending their China operations.

The suspension was undertaken after Beijing ramped up its efforts to crack down on bitcoin mining and trading, causing the digital coin to plummet.

Cryptocurrency miners use increasingly powerful computer machines and equipment to verify virtual coin transactions in a process which produces newly minted cryptocurrencies such as bitcoin, dogecoin or Ethereum.

A State Council committee led by Chinese Vice Premier Liu He announced a crackdown on digital currencies late on Friday.

The move is being undertaken in a bid to fend off financial risks.

READ MORE: Elon Musk makes dramatic U-TURN on cryptocurrency

The crackdown is the first time the State Council has targeted virtual currency mining.

The crypto mining industry is a huge sector in China, which accounts for more than 70 percent of the world’s digital currency supply.

The country is seeking to clamp down on illegal activities across the securities industry while maintaining stock, bond and forex market stability.

The cryptocurrency exchange Huobi suspended mining and trading services to mainland Chinese clients on Monday.

The platform said it would instead focus on overseas business.

China’s Bitcoin and crypto analyst Wu Blockchain discussed the move on Monday.

The platform tweeted: “The prices of the Hong Kong listed companies of OKEx and Huobi fell by 14.9 percent and 20.1 percent, showing the panic of stock investors before the Chinese government's next policy.

“Huobi has already applied for multiple crypto funds. ​But their listed companies do not include exchanges.”

Wu Blockchain added: “Most of the coins with the largest decline in seven days are cryptocurrencies initiated by or mainly invested by Chinese people.”

DON'T MISS Cryptocurrency prices: Why Bitcoin, Dogecoin future looks 'healthy' [INSIGHT] Crypto fraudsters use Elon Musk SNL appearance to scam people out £7m [EXPLAINER] How many SafeMoon coins are there? What is its volume? [ANALYSIS]

Several cryptocurrencies have seen a marked decline in the last seven day in the wake of Chinese announcements last week.

Dogecoin is down 14.13 percent in the past seven days, while Ethereum has dropped 5.01 percent.

Bitcoin also has risen by 0.16 percent and the self-professed sustainable digital coin Cardano increased by 0.72 percent.

The market is generally showing signs of recovery in terms of the past 24 hours, with most digital currencies showing growth.

A general upsurge began for many cryptocurrencies on Saturday after SpaceX founder Elon Musk threw his support behind these digital currencies on Saturday.

Elon Musk tweeted his support for digital coins over fiat currencies.

Mr Musk tweeted: “The true battle is between fiat and crypto. On balance, I support the latter.”

His comments were made despite an announcement from Tesla revealing it was suspending purchases using bitcoin.

The statement read: “Tesla has suspended vehicle purchases using bitcoin.

“We are concerned about rapidly increasing use of fossil fuels for bitcoin mining.”

When you subscribe we will use the information you provide to send you these newsletters. Sometimes they'll include recommendations for other related newsletters or services we offer. Our Privacy Notice explains more about how we use your data, and your rights. You can unsubscribe at any time.

The price of the world's preeminent cryptocurrency surged today by over $6,000 (£4,245). This renewed bullish sentiment is being encouraged by Elon Musk's latest tweets promoting cryptocurrencies and his suggestion Tesla would be holding their bitcoin balance with "diamond hands". Mr Musk also said, in the battle between fiat currencies like the dollar and the pound and cryptocurrencies, "he prefers that latter".

CEO of Microstrategy Michael Saylor said: "A crackdown on miners in China would radically reduce the carbon footprint of bitcoin mining.

"It would increase the profitability of all the remaining bitcoin miners, reduce nagging China FUD (fear, uncertainty, and doubt).

"It will also support progress toward our ESG goals (Environmental, Social, and Governance certificate) and drive up the value of bitcoin."

The outcome of China banning bitcoin mining within its borders could improve the chances of bitcoin becoming ESG friendly.

The news of China's banning of bitcoin mining was announced late on Friday evening.

The move by the State Council committee led by Vice Premier Liu caused a slump in global cryptocurrency prices over the weekend.

The crackdown by Chinese authorities on the nation's mining operations has been viewed as bullish news by many cryptocurrency proponents.

The news was met with a positive reaction by cryptocurrency experts who said it would lead to more decentralisation in the bitcoin mining hash rate.

READ MORE: Elon Musk makes dramatic U-TURN on cryptocurrency

The bitcoin mining hash rate is a measure of the processing power of the whole network.

Speaking to Express.co.uk about the recent clampdown on bitcoin mining operations, Max Keiser said: "Bitcoin is designed to attract the biggest attacks possible.

"This makes the hashrate go up.

"This, in turn, increases security and thus drives the price higher."

DON'T MISS Cryptocurrency prices: Why Bitcoin, Dogecoin future looks 'healthy'  [INSIGHT] Crypto fraudsters use Elon Musk SNL appearance to scam people out £7m  [EXPLAINER] How many SafeMoon coins are there? What is its volume?  [ANALYSIS]

Cryptocurrency mining operators, including Huobi Mall and BTC.TOP, are now suspending their operations in China and some are considering relocating to the US.

Jiang Zhuoer head of China's Lebit Mining said in a statement that his mining operation is planning to move to the US.

Today he said: "Mining in China may change from large to family miners, even if it causes 50 percent of the mining machines to fail to operate, there is no problem for the Bitcoin system.

"But the top mining pools may become European and American mining pools."

Bitcoin regained some ground on Thursday from the previous session's brutal slide to four-month lows but was weighed down by concerns over tighter regulation in China and unease over the extent of leveraged positions in the cryptocurrency world. Bitcoin, the biggest and most popular cryptocurrency, rose 8.75 per cent to touch $40,000, after plunging 14 per cent on Wednesday to its lowest since late January.

Smaller rival ether was up 6.6 per cent at $2,600 at 0630 GMT, but in extremely volatile trading after its 28 per cent tumble on Wednesday. Wednesday's declines in both digital assets were their biggest daily percentage moves in more than a year as investors rushed to exit trades that until recently were heartily outperforming traditional markets such as stocks and bonds.

The latest catalyst was a statement by Chinese financial industry groups on Tuesday banning institutions from offering cryptocurrency registration, trading, clearing, and settlement. But bitcoin had been under pressure for almost a week after a series of tweets from carmaker Tesla's chief Elon Musk, a major cryptocurrency backer, chiefly his reversal on Tesla accepting bitcoin as payment.

While Beijing has taken steps before to block access domestically to cryptocurrency exchanges, its latest directive was broader. It bans the use of cryptocurrencies in payment and settlement, and prohibits institutions from providing crypto-related products or exchange services between cryptocurrencies and the yuan or foreign currencies.

Chris Weston, head of research at brokerage Pepperstone in Melbourne, pointed to how $9.13 billion of cryptocurrency positions had been liquidated across exchanges over 24 hours, and $532 billion in total volume transacted. "It's too early to say if the rebound we've seen off the lows in crypto has legs, but as we roll into Asian trade, I question if we will get a chance to catch our breath or is there more volatility in store?" he said.

The slide forced some investors to close out leveraged positions in cryptocurrency derivatives, which caused prices to fall further and knocked digital assets down into a lower trading range, traders said. James Quinn, managing director at Q9 Capital, a Hong Kong-based cryptocurrency private wealth manager, said there wasn't that much evidence of extended leverage in these cryptos and that the selling reflected huge crowded positions in ether.

Ether was up six-fold until the selloff, stealing a march over bitcoin this year after being widely used in non-fungible tokens on digital art platforms. "To me, this is just as much of a spot led selloff as it is a reflection of people de-leveraging futures and swaps products," Quinn said.

"Sometimes a market event is looking for a cause. I think this is about positioning. Over the long term, maybe it's positive because a very crowded trade from a lot of new entrants means there are a lot of new entrants." Bitcoin may fall a little further but is likely to stabilise around $30,000, said Justin d'Anethan, head of exchange sales at Diginex, a Singapore-based digital asset market.

Digital assets have been on a wild ride this year as a growing number of retail and institutional investors bet that bitcoin and other crypto currencies will gain mainstream acceptance, but large price swings are common. Bitcoin is up 27 per cent so far this year, and intra-day volatility has spiked to near 300 per cent this week.

Prominent crypto backers such as MicroStrategy Inc's CEO Michael Saylor, Ark Invest's Chief Executive Cathie Wood and Musk indicated their support for bitcoin as it plunged on Wednesday. While some retail traders saw missed opportunities in the slide, others saw the rout as a chance to pick up digital assets on the cheap.

"Bitcoin broke down technically," said Michael Oliveri, an independent New York-based equity trader who was formerly a partner at First New York Securities.

"It was an easy short setup actually. I'm annoyed I didn't short it. I wouldn't chase it now." Milko Markov, an independent London-based trader, said he had been buying ether. "Those with a bit more experience in the crypto market know two cardinal rules: don't leverage and dollar cost average," he said.

Also read: Crypto in free fall: Bitcoin tanks 30% to $31,000, Ethereum loses 40%, Dogecoin down 45%